Layer-2 Tracks to Watch in 2025: In-Depth Analysis of 10 Top Projects

Why has Layer-2 become the hottest track this year?

If you’re still stuck on Bitcoin’s 7 transactions per second or Ethereum’s 15 transactions per second, then you’re OUT. This is exactly the reason Layer-2 exists — to make on-chain transactions lightning-fast and almost free.

Imagine Visa processing 1,700 transactions per second, while mainstream blockchains fall far short. This is the core challenge faced by blockchain: scalability. Without solving this, flashy applications like DeFi, GameFi, NFTs, and the Metaverse are just decorations.

Layer-2 protocols are the ultimate answer to this problem. They are not just superficial fixes but preserve the security of Layer-1 (like Ethereum) while processing transactions off-chain, greatly increasing throughput and reducing fees — it’s like building a super-fast highway lane on a busy road.

What exactly is Layer-2? A simple explanation

The core principle is simple: process off the main chain, then settle back later.

Imagine the main chain as the city’s main road, heavily congested. Layer-2 is like opening multiple auxiliary roads nearby, diverting traffic onto these side routes for quick processing, then consolidating the results back onto the main road. The result? Transactions are super fast, fees are dirt cheap, and the network isn’t clogged.

Three major advantages of Layer-2:

• Better user experience for DeFi and dApps: Low transaction fees mean small transactions are feasible, enabling lending, trading, mining, and more.
• Increased earnings for traders: Especially for high-frequency traders like quant traders and arbitrageurs, every fee saved is real money.
• Large-scale applications become possible: From finance to gaming, from NFTs to supply chains, Layer-2 makes all this more feasible.

Layer-1 vs Layer-2 vs Layer-3: Clarify these three layers

Layer-1 (L1): The base layer, like Bitcoin and Ethereum. Fast and secure but limited in capacity.

Layer-2 (L2): Built on top of L1, like highway ramps. Equally secure (since settlement still relies on L1), but faster and cheaper. Most users should operate here.

Layer-3 (L3): An additional layer built on top of L2. Optimized for specific applications, such as a highly complex DeFi protocol that might need its own L3.

The choice is clear now: for foundational security, choose L1; for daily transactions, L2; for highly customized solutions, L3.

The technical factions of Layer-2: showcasing their skills

Optimistic Rollups: Trusting most people are good

This approach assumes everyone is honest, and transactions are valid by default. Disputes are only verified if challenged. Sounds laid-back, but actually very efficient — most transactions pass quickly, only suspicious ones require deep verification.

Representative projects: Arbitrum, Optimism

Zero-Knowledge Rollups: Mathematical magic to verify all transactions

This is high-end. Uses cryptographic proofs to validate transactions without checking each one individually. Safer, with stronger finality. The downside is high technical complexity and development difficulty.

Representative projects: Polygon, Coti, Manta Network, Starknet

Validium: Off-chain validation with on-chain guarantees

Transactions are validated off-chain, with cryptographic proofs ensuring validity. A compromise between optimistic and ZK rollups.

Representative project: Immutable X

Other solutions: Lightning Network, sidechains, etc.

Bitcoin’s Lightning Network is a payment channel solution, scalable but with limited applications. Ethereum also has older solutions like Plasma.

Top 10 Layer-2 projects to watch in 2025

1. Arbitrum (ARB) - The market leader with the largest share

• Throughput: 2,000-4,000 TPS
• Ecosystem TVL: $10.7B
• Current Price: $0.19 | Market Cap: $1.08B
• Technology: Optimistic Rollup

Arbitrum is a top player in Layer-2, holding over half of Ethereum’s L2 TVL. How? Simple and straightforward: fast (10x Ethereum’s speed), cheap (fees down 95%), strong ecosystem.

DeFi giants like Aave, SushiSwap, Curve operate here. The reason is simple — more users, lower fees, higher trading volume, creating a positive feedback loop.

ARB tokens are used for paying fees and governance participation. The network is gradually becoming community-driven. The risk is that Arbitrum is still relatively young, and the L2 space is rapidly evolving with increasing competition. But as a leader, Arbitrum’s position is hard to shake in the short term.

2. Optimism (OP) - The energetic community competitor

• Throughput: 2,000 TPS
• Ecosystem TVL: $5.5B
• Current Price: $0.26 | Market Cap: $511.49M
• Technology: Optimistic Rollup

OP is also a leading optimistic rollup solution, though its ecosystem is smaller than Arbitrum’s, it’s growing fast. Its biggest feature is community governance — from the start, it aimed for DAO.

Transaction speed is 26 times faster than Ethereum, fees reduced by 90%. The ecosystem is expanding rapidly, with various DeFi and NFT projects deploying here. OP tokens are used for governance and fee payments.

Risks are similar to Arbitrum — early-stage optimistic rollup projects. But OP’s community enthusiasm might help it achieve network effects more easily.

3. Lightning Network - Bitcoin’s counterattack

• Theoretical throughput: Up to 1 million TPS
• Ecosystem TVL: $198M+
• Technology: Payment channels + smart contracts

If Arbitrum and Optimism are Ethereum’s expressways, then Lightning Network is Bitcoin’s high-tech innovation. It enables Bitcoin to perform microtransactions instantly and cheaply.

The principle is off-chain payment channels — you and a merchant open a channel, transfer funds off-chain, and only settle the final state on-chain when closing the channel.

Advantages: nearly free transactions, instant confirmation, potential for 1 million TPS throughput.

Disadvantages: high technical complexity, limited adoption, security still under exploration.

But this is key to making Bitcoin truly a “peer-to-peer payment” system. If Bitcoin is to enter everyday use, Lightning Network will be crucial.

4. Polygon (MATIC) - The multi-chain ecosystem’s all-rounder

• Throughput: 65,000+ TPS
• Ecosystem TVL: $4B
• Market Cap: $7.5B+
• Technology: ZK Rollup + sidechain hybrid

Polygon is no longer just “Ethereum L2” but a full multi-chain ecosystem. It supports ZK rollups, sidechains, Plasma, and more.

Most impressive is its throughput — over 65,000 TPS, crushing all other L2s. Fees are nearly free. Top projects like Aave, SushiSwap, Curve, OpenSea are all using Polygon.

MATIC tokens are used for fee payments and governance. Its ecosystem is the most mature and diverse.

Risks include project complexity, innovation pressure, and the need for continuous upgrades to stay competitive as other L2s develop.

5. Base - Coinbase’s L2 ambition

• Throughput: 2,000 TPS
• Ecosystem TVL: $729M
• Technology: Optimistic Rollup (OP Stack)

Coinbase hasn’t issued its own native L2 token but chose to build its L2 using OP Stack (Open-source framework from Optimism). This is a smart move — leveraging mature solutions saves time and effort.

Base benefits from Coinbase’s brand and user base. Fast transactions, low fees, and Coinbase’s reputation for security attract conservative users.

The downside is low tokenization (initially no native token), and the ecosystem is still under construction. But long-term, Coinbase’s backing could make Base a top choice for retail users.

6. Dymension - The modular dark horse

• Throughput: 20,000 TPS
• Ecosystem TVL: 10.42M DYM
• Technology: RollApps (modular rollup)

Dymension takes a different approach — it’s the first L2 in the Cosmos ecosystem. Its innovation is “RollApps,” allowing each application to have its own optimized rollup, rather than sharing a single L2.

This forward-thinking idea: shared security (via Dymension Hub), but independent scaling for each app. Theoretically, it can scale infinitely.

Risks include early-stage development, high complexity, and a learning curve for users. But if modularization proves successful, Dymension could become a benchmark for next-gen L2s.

7. Coti - Privacy-first shift

• Throughput: 100,000 TPS
• Ecosystem TVL: $29M
• Current Price: $0.02 | Market Cap: $54.52M
• Technology: ZK Rollup

Coti was originally a Layer-2 in the Cardano ecosystem, now shifting focus to Ethereum L2 with an emphasis on privacy features. This is its unique selling point — most L2s don’t prioritize privacy.

The new architecture is EVM-compatible ZK Rollup, retaining Coti’s privacy features (obfuscation circuits). Developers can build privacy DeFi apps on Ethereum tools.

Risks include the costs of the major transition and technical complexity. But if privacy becomes essential for DeFi, Coti could find a blue ocean.

8. Manta Network - Privacy DeFi pioneer

• Throughput: 4,000 TPS
• Ecosystem TVL: $951M
• Current Price: $0.07 | Market Cap: $33.58M
• Technology: ZK Rollup

Manta is also focused on privacy, but more mature and earlier established. It includes two parts: Manta Pacific (EVM-compatible L2) and Manta Atlantic (privacy identity management).

Using zero-knowledge cryptography, it makes transactions untraceable while maintaining high throughput and low costs. It’s now the third-largest Ethereum L2 ecosystem by TVL.

MANTA tokens are used for payments, staking, and governance. The ecosystem hosts many privacy DeFi applications.

Risks involve regulatory challenges for privacy features and the current limited user base seeking privacy.

9. Starknet - The cryptography wizard’s choice

• Throughput: 2,000-4,000 TPS
• Ecosystem TVL: $164M
• Technology: ZK Rollup (STARK proofs)

Starknet uses STARK proofs (different from zk-SNARKs), claiming to reach hundreds of thousands of TPS theoretically. It’s cutting-edge tech with high difficulty.

Its development language is Cairo, which can scare off many developers. But if you’re a cryptography enthusiast or require high privacy/scale, Starknet is the top choice.

The ecosystem is still early, with a small user base but huge growth potential. It’s a “high-tech, high-risk, high-reward” project.

10. Immutable X (IMX) - The game-specific express lane

• Throughput: 9,000+ TPS
• Ecosystem TVL: $169M
• Current Price: $0.23 | Market Cap: $192.28M
• Technology: Validium

Immutable X targets gaming and NFTs — a smart niche. It’s not a general-purpose L2 but a “game-specific L2.”

Using Validium technology (off-chain validation with on-chain guarantees), it achieves instant transactions and near-zero fees. Perfect for gaming — fast, cheap, secure.

Its ecosystem includes many blockchain games and NFT projects. IMX tokens are used for payments, staking, and governance.

Risks include the narrow focus (mainly gaming), which might limit growth compared to general-purpose L2s. But if Web3 gaming explodes, IMX will benefit most.

Will Ethereum 2.0 kill Layer-2?

Definitely not. On the contrary, Ethereum 2.0 will further unleash the potential of L2.

The key upgrade is Danksharding, with Proto-Danksharding already underway. It will boost Ethereum mainnet throughput to 100,000 TPS.

This might seem like a blow to L2, but actually:

L2 will become cheaper: Danksharding optimizes data storage costs for L2, further lowering fees — imagine reducing from 1 cent to 0.1 cent per transaction.

L2 will become faster: Protocol improvements between L1 and L2 will make cross-layer communication more efficient, smoothing cross-L1-L2 transactions.

User experience will dramatically improve: Faster L1, cheaper L2, working together to enable seamless DeFi, gaming, and payments.

Result: L1 and L2 are not competitors but complements. L1 handles security and finality, L2 handles throughput and cost. Together, they make Ethereum a true global computer.

Summary: Layer-2 is no longer future — it’s now

By 2025, the Layer-2 race is no longer about “if” but “who will win.” Arbitrum and Optimism have proven feasibility, Polygon demonstrates ecosystem scale, Manta and Starknet advance privacy tech, Dymension experiments with modularity…

All paths are running, each with its advantages. Which to choose? Depends on your needs:

• For the most stable experience? Arbitrum or Polygon
• For community governance? Optimism
• For privacy? Manta or Coti
• For gaming? Immutable X
• For cutting-edge tech? Starknet

One thing is certain: the era of mainnet dominance is fading. The future is a dual-layer architecture of L1 + L2, making blockchains fast, cheap, and secure.

Layer-2 is not just a stopgap for Ethereum congestion; it’s becoming the standard infrastructure for Web3. The wave is already rising — are you ready to surf?